Parnassus Core Equity Fund
What is it?
The Parnassus Core Equity fund is a large-cap blend fund with an objective to provide capital appreciation and income by investing principally in equity securities of larger capitalization companies.
How does it work?
This fund is an actively managed portfolio using different strategies, including:
Dividends. At least 75% of the fund’s total assets will normally be invested in equity securities that pay interest and dividends. The remaining 25% may be invested in non-dividend-paying securities.
Environmental Social Governance (ESG). The Parnassus Core Equity fund seeks to invest in companies with positive performance on ESG criteria. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Defensive nature. The portfolio managers focus on high-quality companies that may perform better than the market during downturns.
All investments involve risk and investing in the Parnassus Core Equity Fund is no exception. You could lose money investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time. The Fund is intended for investors who can accept that there will be fluctuations in value.
The number of funds that incorporate Environmental, Social, and Governance factors as a subset of nonfinancial performance indicators is on the rise. This is in response to many investors’ desire to invest in a way that aligns with their values.
This is not an offer. Securities can be offered by the prospectus only. The Parnassus Core Equity Fund is not suitable for all investors and the prospectus should be read carefully by an investor before investing. Investors are advised to consider the investment objectives, risks, charges, and expenses carefully before investing. This prospectus, which is available at SEC.gov and weabenefits.com/investments, and may be obtained by calling 1-800-279-4030, contains this and other information about the fund. Securities offered through WEA Investment Services, Inc. Member FINRA.
Get the facts about Member Benefits’ retirement and savings program
MYTH: You have to move your money out of WEA Member Benefits because (fill in the blank).
- Retire or leave your job to take another job (even if it’s not in education).
- Turn (insert any number) years old.
- Move out of Wisconsin.
MYTH: Consolidating your money will make it easier for your beneficiaries.
Sure, consolidation makes managing your money easier, but unless you are consolidating into a low-cost program, your account balance could take a hit.
You won’t have access to your 403(b) funds in retirement because it is in an “annuity” (tax-sheltered annuity).
Our program has flexible withdrawal options without surrender periods (the amount of time an investor must wait before withdrawing funds from an annuity without penalty). Often individual annuities or insurance company annuities have surrender/maturity periods that are many years long (sometimes 5–12 years). Ours doesn’t.
MYTH: My beneficiaries are specified in my will, so I’m set.
Your will is not enough. The beneficiary designated on any retirement account supersedes the instructions found in a will or a trust. So be sure yours are up to date on all of your retirement accounts, and review and update your accounts whenever you experience any major life events (marriage, divorce, birth of a child, death of a family member, etc.).
MYTH: There are fees to transfer money from other retirement accounts into Member Benefits program.
Nope! The WEA TSA Trust does not charge fees to transfer money from other retirement accounts into our program. However, if your retirement account at your current carrier has a surrender fee, or if you move money from a mutual fund that has a redemption sales charge, you may be charged a fee from your current carrier. Contact your current provider to review possible charges.
MYTH: There are fees to get funds out of your Member Benefits account upon retirement.
Nope again! Member Benefits does not charge transactional fees or surrender charges even if you move your money out. (Mutual fund redemption fees may apply in certain situations.)
MYTH: Member Benefits doesn’t offer nonretirement accounts.
Yes, we do! We have been offering Personal Investment Accounts since 2018. It’s a way to invest your money outside of a retirement account without using a cash account such as savings, checking, or certificates of deposit. It can be registered in just your name or opened jointly with anyone.
MYTH: In order to open a WEA Member Benefits IRA, I have to live in Wisconsin.
In case you missed it, Member Benefits recently opened our IRA program to folks who live outside of Wisconsin! If you meet eligibility guidelines and live in one of the states that offer our IRA program, you and your family may enjoy the benefits of saving with a WEA Member Benefits IRA.
Have some questions about your retirement account or need help getting started? Contact us at 1-800-279-4030 or email@example.com.
Know your retirement contribution limits
However, if you’re not maxing out your retirement contributions, it’s a great reminder to contribute as much as you can right now to ensure you won’t have regrets about how much money you saved for retirement later.
The 2021 limit for the 403(b) is $19,500 and the age 50 and over catch-up is $6,500. For the IRA, the limit is $6,000 with the age 50 and over catch-up an additional $1,000. Get more details at weabenefits.com/limits.
You will need to contact your employer to increase your 403(b) contribution. Some employers only allow changes at the start of the school year and then again in January. Others allow more frequent changes. Both you and your employer will need to sign a salary reduction agreement.
Take some time to review your account and see if you can give yourself a raise! Call us at 1-800-279-4030 if you need assistance or have questions.
National Retirement Security Week 2020
“According to the 2019 EBRI/Greenwald Retirement Confidence Survey, two-thirds of American workers say they are confident they will have enough money to retire comfortably.”
Yet more than 22 percent of Americans have less than $5,000 saved for the future, and another 15 percent have nothing at all saved. (Northwestern Mutual 2019 Planning & Progress Study)
Those between the ages of 55 and 64 who have retirement savings only have a median of $120,000 saved.
56 percent of Americans don’t know how much money they’ll need to save to retire comfortably. (Northwestern Mutual).
Not only are Americans seemingly unprepared for retirement, most don’t even know it. Social Security’s future is uncertain, private sector pension plans are disappearing, life spans are increasing, and health care costs are rising. Working longer and living on less will be a harsh reality for many.
The good news
As a public school employee, your employer contributes to the Wisconsin Retirement System on your behalf, covering a portion of your retirement needs. But that’s not all.
As a public school employee, you are eligible to open a 403(b) retirement savings account. A 403(b) is a great opportunity to build additional savings with before- and/or after-tax contributions conveniently deducted from your paycheck. A 403(b) can help you achieve your retirement dreams, regardless of your age.
Start today. The longer your time horizon before retirement, the longer your money can work for you. You can start a 403(b) with as little as $20 per pay period. When selecting a provider, compare fees. Even one percentage point can make a big difference in your account balance at retirement.
Take time to calculate your retirement income needs. Our retirement planning calculators can help you approximate how much you need to save, determine the impact of changing your retirement savings payroll deductions, ascertain projected shortfall or surplus at retirement, and more.
Work toward contributing the maximum allowed. Include after-tax (Roth) contributions, if available in your district, to your 403(b) account to help reduce your tax liability in retirement. Please check with your employer for the availability of after-tax contributions.
Member Benefits’ 403(b) program
Most public school employees in Wisconsin have access to Member Benefits’ 403(b)—a program recognized nationally by Forbes and the LA Times for its sound management and low fees. Call one of our consultants at 1-800-279-4030 for more information.
Q&A on the PIMCO All Asset Fund
What is it?
The PIMCO All Asset fund (Prospectus / Fact Sheet) is known as a “fund of funds” because it has several different kinds of funds with different strategies. Each fund holds different types of investments such as bonds, TIPS (Treasury Inflation Protection Securities), commodities, real estate, emerging-markets debt, equities, and alternative assets. Because of the broad inclusion of investments, it is considered an “All Asset” fund.
How does it work?
The PIMCO All Asset fund is an actively managed portfolio. The fund manager goes in and out of the various underlying PIMCO funds using a tactical asset allocation strategy seeking to create appreciation and income by buying and selling different funds across different assets. The fund does have a prebuilt allocation, but if the fund manager believes there is an opportunity in a particular investment, they will shift the portfolio to try and capture the opportunity. Once the opportunity has been captured or is no longer an opportunity, they will revert to the original preset allocation.
Due to the broad nature of the investments in the fund and its global reach, the fund does carry several risks including currency risk, distressed investments, interest rate risk, leverage, sovereign debt, potential loss of principal, and market volatility. The fund manager also has broad discretion over the allocation of the fund, which can cause the level of risk to fluctuate. For example, if the fund goes from 60% bonds and 40% stocks (a generally conservative stance) to 20% bonds and 80% international stock, the level of risk has increased.
The benefit of this fund is that it gives investors access to a broad range of different investment assets with the potential of capturing short-term gains in various opportunities in the market. However, the level of risk in this fund can change because assets are moved to capture short-term gains.
In a portfolio
The PIMCO All Asset fund can be a good hedge against inflation as it tries to capture short-term gains by moving assets through various investments and strategies. It also holds treasury inflation protections as a part of its general allocation to protect assets against inflation. However, keep in mind the fund’s risk and investment strategy can shift frequently.
This is not an offer. Securities can be offered by the prospectus only. The PIMCO All Asset fund is not suitable for all investors and the prospectus should be read carefully by an investor before investing. Investors are advised to consider the investment objectives, risks, charges and expenses carefully before investing. This prospectus, which is available at SEC.gov and weabenefits.com/investments, and may be obtained by calling 1-800-279-4030, contains this and other information about the fund. Securities offered through WEA Investment Services, Inc. Member FINRA.
NEW! IRA program available outside of Wisconsin
For those who meet our eligibility criteria, we have great news! We’ve expanded our IRA eligibility guidelines to include those who live in certain states.
Our IRA is open to family members
Family may also participate in our IRA program if they live in one of the approved states, so you can all enjoy the benefits of saving with a WEA Member Benefits IRA.
Take advantage of this savings opportunity
For more information and to learn which states are eligible, contact us.
To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Restrictions may apply. Certain state residency required.
Women and retirement: 6 challenges to a secure future
A comfortable retirement is an expensive endeavor for everyone. Financial planners suggest one should shoot for an annual retirement income that’s roughly 85% of your preretirement income, depending on your continued fixed expenses. Translation? Everyone needs to save—a lot. But women should actually be saving more.
“Women are at a much higher risk of facing financial uncertainty in retirement and retiring with considerably less savings than men,” says Andrea Hartwig, Financial Planner at WEA Member Benefits. “Women face unique challenges. Generally, they spend fewer years in the workforce, earn less income, gravitate toward conservative investments, and have longer life spans than men.”
While not every woman will experience the same challenges, it is likely that most will face more than one, which compounds the problem. “Their road to retirement is more long and winding than that of their male counterparts,” explains Andrea, “making it even more critical for women to recognize key life events that can trigger a financial setback. Women need to be aware and prepare.”
Challenges facing women
1. LIVING LONGER
The life expectancy for men in the U.S. is 76 years. For women it’s 81.1 While five years may not seem like a lot over a lifetime, it does mean the average woman will need to save more to fund the extra years compared to the average man. From a financial perspective, this is significant—and the price tag on those years will likely be higher.
Longevity brings with it a greater potential for increased health care costs. “People often believe that once they hit 65 and qualify for Medicare, their health care costs are covered, but that simply isn’t the case,” says Andrea. “Medicare is a great benefit, but it’s far from free. There will still be out-of-pocket expenses that are not insignificant.”
It is estimated that the average couple retiring at age 65 will need $285,000 to cover health care and medical costs in retirement. Women will need more than men—$150,000 vs. $135,000.2 And that doesn’t include long-term care services, which, despite what many think, are not covered by health insurance or Medicare. This is an important consideration as:
- Seventy percent of those turning age 65 today will need some type of long-term care services in their remaining years.
- Women make up more than 70% of nursing home residents and on average need care almost twice as long as men.
- The annual median cost for a private room in a nursing home in Wisconsin is about $112,146, and a private room in an assisted living facility is $51,600, around the same cost as 40 hours a week of a home health aide.3
Health care continues to be one of the largest expenses in retirement. The longer you live, the greater the cost will likely be.
2. EARNING LESS
While strides have been made regarding equal pay, women are not always paid as much as men in the same fields and positions. According to the U.S. Census Bureau, women earn about a third less than men during their working lives, resulting in smaller contributions to Social Security, pensions, and other retirement accounts. It is a major contributing factor as to why women are 80% more likely to wind up in poverty than men when they’re age 65 or older.4
Women are also more likely to work part-time because they often fulfill other roles in the family requiring their time (like caregiving). Part-time workers may not qualify for their employers retirement plan, and again, lower income means less going into Social Security on their behalf.
3. TAKING CARE OF OTHERS
The pay gap issue is amplified for women who drop out of the workforce temporarily to be stay-at-home moms or to care for sick or aging parents. With 75% of all unpaid caregivers being women, the impact is far reaching and has long-term financial implications.5
Here’s what that means for women financially.
- Every year spent out of the workforce costs families three times the parent’s annual salary in lifetime income.6
- Women who take time off can fall behind in rank and miss out on opportunities for career advancement and increased income.
- Loss of access to an employer-sponsored retirement plan and a reduction in pension accumulation.
- Loss of contributions and years of credits to Social Security benefits.
However, Andrea notes, this shouldn’t discourage women from taking time out of their careers.
“The key is to plan for it. The earlier you start saving and the more you contribute, the more time you can comfortably take off from your career,” she says.
4. INVESTING TOO CONSERVATIVELY
By and large, women gravitate toward more conservative investments than men. Playing it safe is more comfortable and may be a good approach when near or in retirement, but such a strategy usually means lower earnings over the long run. “If you take this approach, you may need to invest more money to meet your goals. But if there’s a time to be more aggressive, it’s when you’re young. Because of the long timeline, you are in a better position to recover from market fluctuations,” says Andrea.
Having a better understanding of investing and the relationship between risk and reward will help you find an investment strategy that will help you reach your goals and still sleep at night. It’s a balance. And, don’t be afraid of getting some professional help. You can go to weabenefits.com/financialconsults to learn about financial consultation options and set up a phone or video conference with a financial planner.
The Investor Suitability Profile Questionnaire offered by Member Benefits can help you determine the level of risk you’re comfortable with. After providing some basic information about your situation and answering six questions, you will receive an indication of your investment style along with an appropriate investment allocation.
5. BEING SINGLE or SINGLE AGAIN
This challenge is really more about planning for your future than it is about marital status. Because nearly every woman will have sole responsibility for her finances at some stage in her life—whether single by choice, divorce, or widowhood—it’s important for women not only to have a plan but to also have ownership in the plan.
“Women should always be involved in conversations about finances, whether that’s at the financial advisor’s office or at the dining room table at home. This is not the place to hand off control. Taking responsibility for your own financial security will prepare you for whatever turns your life may take,” encourages Andrea.
6. MAKING BIG DECISIONS WITHOUT ALL THE FACTS
It goes without saying that any big decision should be made with care—and there may be no greater decisions to make right now than about your financial future.
“Here is where having knowledge about your long-term finances comes in handy,” says Andrea. Knowing how you (and your spouse if applicable) are saving and what kind of accounts you have—403(b,) IRA, 401(k), and/or your Wisconsin Retirement System—is significant, because each account type has different rules and restrictions, and each serves a strategic role in your retirement income stream.
Without that knowledge, people can make costly and irreversible mistakes. For instance, it’s all too common for people to dip into their retirement account early. In fact, 52% of all savers take early withdrawals—a move that can cost you dearly in three ways:
- Penalties for unqualified distributions typically run 10% but could be higher if the account has surrender fees.
- Taxes may apply to withdrawals and may push you into a higher tax bracket.
- Earnings on the money you withdraw will cease, and you will lose out on future growth from compound interest.
“While this may be tempting, especially in difficult times like the COVID-19 pandemic, it really should be a last resort option,” says Andrea. “Your retirement savings should be earmarked for retirement. Building an emergency fund where the money is easy to access is a better way to plan for surprise financial situations that pop up in daily life.”
It’s all connected
Generally, the closer you get to retirement, the more complex your finances become—and it’s also a time when you are financially vulnerable. You will have several big decisions to make, including when to stop working, when to take Social Security, how to pay for health care, and how to generate cash flow from your retirement assets. These decisions are interconnected and could make a difference in your living costs and lifestyle in retirement—and ultimately determine when you can retire.
Andrea advises, “You really want to have a handle on these well before retirement. If you have a solid plan and an understanding of what your plan entails, the decisions will be easy to make.”
The information in this article is provided only as a summary of complicated topics and does not constitute legal, tax, investment or other professional advice on any subject matter. Further, the information is not all-inclusive and should not be relied upon as such. All investments hold risk and there can be no guarantee that your investments will be profitable or that your goals will be achieved.
1 U.S. Census Bureau | 2 HealthView Services (a provider of health-care cost projection software) and Fidelity Investment (2019)
3 Wisconsin Office of the Commissioner of Insurance (OCI) (2019) | 4 2018 report from the National Institute on Retirement Security
5 American Association for Long-term Care | 6 Center for American Progress
ARTWORK: Daisy Garrett
Take advantage of our financial planning services
Our financial advisors specialize in working with Wisconsin public school employees, understand the unique retirement benefits available to them, and are experts in coordinating those benefits. We take time to help you identify and prioritize your financial goals, determine whether you are on track to meet your goals, and provide you with the information and tools to help you get there.
Member Benefits’ financial planning services are designed to address the changing needs of Wisconsin public school employees at various points in their careers and lives. And there are no commissions, which means you receive an unbiased analysis of your situation.
1-800-279-4030, Extension 6730
Mutual fund change coming in August
The Fidelity Diversified International K6 fund is going to be replaced with the JHancock International Growth R6 fund for both the 403(b) and IRA mutual fund lineups. The change will take effect August 3, 2020.
There will be blackout periods in which some transactions are limited or stopped until the change has been completed. Online distributions, future investment election changes, exchanges, and rebalances will be disabled on or around 3 p.m. on July 31, 2020, and are expected to be restored on or around 3 p.m. on August 5, 2020.
The JHancock International Growth R6 seeks to keep pace with rising markets though capital growth by investing in high-quality growth stocks in developed countries primarily in Europe and Asia. The fund allocates investments through a broad range of sectors across different countries and regions.
Give us a call at 1-800-279-4030 if you have any questions about the fund or the blackout.
This is not an offer. Securities can be offered by the prospectus only. The JHancock International Growth R6 fund is not suitable for all investors and the prospectus should be read carefully by an investor before investing. Investors are advised to consider the investment objectives, risks, charges, and expenses before investing. This prospectus, which is available at SEC.gov and weabenefits.com/investments and may be obtained by calling 1-800-279-4030, contains this and other information about the fund.
Important information for members and plan sponsors
On the weekend of August 21, our vendor for the yourPLAN ACCESS and yourMONEY websites will be performing scheduled maintenance, and these websites will be unavailable to members and plan sponsors.
We anticipate the systems will come down after nightly processing at around 10 p.m. on Friday, August 21, and will be available again once the scheduled maintenance is completed. yourPLAN ACCESS and yourMONEY should be back online no later than 7 a.m. on Monday, August 23.
Mutual fund change
Our mutual fund change is complete. Read more about the mutual fund change.
Call us at 1-800-279-4030 if you have any questions.
Keep calm and invest on
As of March 2020 when this article is being written, we’re dealing with an unprecedented health crisis. Our personal lives are being affected in a myriad of unexpected ways. It is understandable that most of us probably feel anxious and unsure about the future.
The daily news has raised fear in investors, and the disruptions to our daily lives have changed the way we’re spending our money. But when it comes to saving for your future, it’s more important than ever to keep a clear head.
You may be tempted to stop funding your retirement account, move it to something very conservative, or cash part of it out. But before you make any rash decisions, take a breath and remember: One of the best things you can do right now for your retirement is to stay the course for the long term.
Noted investor Warren Buffet saw this over 30 years ago when he described two “super-contagious diseases” that will forever have occasional outbreaks: Fear and greed among investors. As he famously stated as a strategy against this “disease,” people should “…be fearful when others are greedy and be greedy only when others are fearful.”
Although too simplistic to be construed as Buffet’s recommended investment strategy, his point is well founded. It’s all too common for investors to bolt when things go poorly.
And at the moment, fear is ruling. That’s why it’s more important than ever to be as rational as you can about your investments during this trying time. Getting some perspective can help you get there.
History is our teacher
Failing to recognize the dangers of letting your emotions drive investing decisions can be disastrous when your life savings are at stake. To understand what effect moving assets out of equities during a volatile market such as the 2008 recession has on account returns, in 2017 Fidelity took a poll of their investors and found that those who continued to contribute to their 401(k) plans between June 2007 and June 2017 benefited from, on average, a tripling of their account balance. For the average baby boomer, the account balance in their 401(k) plans was $115,000 in June 2007, fell to $85,000 at the beginning of 2009, and rose to $315,000 by June of 2017 (Forbes).
Admittedly, it can be difficult to look at a significant drop in your investment portfolio. But if, for example, you stayed the course during the 2008 recession, you were rewarded with an over 11-year bull run. Consider that fact in light of today’s market.
Further, stock market corrections happen more than you probably realize. Over the past 70 years, the benchmark S&P 500 has undergone 37 corrections of at least 10%, not including rounding (Yardeni Research). Stock market corrections usually run their course quickly, and you may profit much more by keeping the long-term view in your sight. (Past performance does not guarantee future results.)
Careful about getting too conservative
It’s understandable if the market volatility makes you feel like you want to go with more conservative investments or even pull out of your mutual funds all together. But know that while that may shield you temporarily, those alternatives have a risk as well—the risk that the rate of inflation will outpace the rate of return on your investments. For example, putting all your savings into cash would leave you exposed to erosion in its value from inflation. Younger people would find it extremely difficult to accumulate meaningful savings. Retirees would shorten the number of years they could cover their retirement expenses, as they still need exposure to stocks and bonds to maximize their nest egg.
Money invested in a fixed-income product like the Prudential Guaranteed Account (PGI)* with Member Benefits may provide investment stability, but it also limits earnings. If you choose to invest entirely in the PGI, you lose the ability to earn as much as you may have been able to if you had invested more diversely in stocks.
Mike Driscoll, Managing Director of Sheridan Road and an Accredited Investment Fiduciary, has 40 years of experience and a lot of knowledge in the financial industry. Mike is also a longtime WEA Member Benefits advisor, and has personal work experience with the PGI. He explains, “The guaranteed fund from Prudential provides stability in periods of market disruptions. Because the fund does not invest in stocks, it allows investors to minimize the impact of volatility in the equity markets. However, the fund is not designed for short-term trading, but for long-term stability of a portion of an investor’s account balance.”
Keep these things in mind: If you’re a younger person, time is on your side in terms of the market and your future ability to generate income. If you’re older and closer to retirement, you may want to be more conservative with your investments—but don’t miss out on the potential earnings of stocks and bonds. Delaying Social Security is another option. It may be a good time to revisit your spending goals and budget so you know exactly where you stand today.
Creating a well diversified portfolio appropriate for your personal situation is important and may help you with market volatility. How to determine what is appropriate is based on factors like your age, your goals, your time horizon (when you need to use the money you invest), and your emotional tolerance for risk.
Don’t try to time the market
Emotions and deeply ingrained biases influence our decisions every day. They are also deeply rooted in personal experiences that influence our decision-making. But they can cause us to behave in irrational ways. Especially in times of uncertainty, investors tend to make investment choices based on emotion rather than careful consideration of their long-term plan. “It’s tempting to sell stocks or cash out your retirement savings when things look shaky, then buy again when the outlook is bright. But trying to time the market almost never pays off because no one really knows what will happen next, even in these challenging times,” says Brenda Echeverria, Financial Planning Supervisor at Member Benefits. “Moving out of your investments into cash or very conservative investments means you may lose any opportunity to recover your losses when the stock market rebounds.”
Mike explains that Nobel Prize-winning psychologist Daniel Kahneman demonstrated this emotional tendency with his loss aversion theory, which demonstrates that people feel the pain of losing money more than they enjoy gains. Our natural instinct is to flee the market when it starts to plummet, just as greed prompts us to jump back in when stocks are skyrocketing (Capital Markets Group, How to Handle Market Declines, March 2020). Adds Mike, “Emotional reactions are normal when events that impact us seem beyond our control. You wouldn’t be human if you didn’t fear loss. But keep in mind that both (instincts) can have negative impacts on your finances.”
Right now, many people are trying to time the market by moving their funds around. There are risks and limitations to this strategy. For one, most investments, including several offered by Member Benefits, have trade restrictions that place a limit on short-term trading. Those who make too many trades within 30 days of purchase could find themselves put on “roundtrip restriction,” which bars shareholders who employ this tactic from making trades for a certain number of days.
If you are in the PGI and participant level protections (PLP) become active, it could limit the outflows from the account. Although PLPs do not apply to benefit responsive withdrawals (such as retirement income), if triggered, they do restrict withdrawal activity. Remember, PLPs are there to protect the account and account holder. For more information on PLPs, please see our article, Protecting a legacy.
If you are considering cashing out your retirement funds temporarily and putting them in the bank, know this: Doing so may make you subject to taxes—and you may be limited in coming back to your retirement program. Also keep in mind that the PGI offers a higher interest rate than a bank.
You have a unique advantage
As a Wisconsin public school employee, you have an advantage that many do not—the Wisconsin Retirement System (WRS) pension plan. This gives you a foundation of retirement income you can’t outlive.
Keep this in mind when you’re reading articles about the market and the COVID-19 crisis. The general population these articles are referring to are in a different situation than you are. It’s like comparing apples to oranges.
If your WRS pension and Social Security are taking care of a substantial percentage of your living expenses, you may not need to be so conservative with your 403(b) and IRA accounts. But of course, everyone needs to make the best decisions based on their own situation, investment objectives, and risk tolerance.
If you want a more in-depth review of your savings strategy, contact us for a complimentary consultation. You may find yourself investing too conservatively, not conservatively enough, or you may just have questions and need some guidance. Visit our financial consultations page. Or if you have questions, feel free to call us at 1-800-279-4030. Our staff is still available to help you from 7:30 a.m. to 5 p.m. Monday through Friday.
*Interest is compounded daily to produce a yield net of Prudential’s administrative fee of 0.60%. PRIAC is compensated in connection with this product by deducting an amount for investment expenses and risk from the investment experience of certain assets held in PRIAC’s general account. For more information, go to weabenefits.com/pru. This is not an offer. Securities can be offered by the prospectus only. For more information and to access the prospectus, go to weabenefits.com/investments.
Stay on course
Investors who have been willing to ride out the volatile returns of stocks over long periods of time generally have been rewarded with strong positive returns. A long-term investment strategy offers a balanced approach to both risk and reward. Best practices associated with long-term investment strategies often include the following:
- Keep a long-term focus and don’t try to time the market.
- Spread out your risk.
Diversifying, or putting your money in different types of investments, has long been recognized as an effective way to manage your risk. In theory, when certain types of investments are declining in value, other types are gaining value. A well diversified portfolio can lessen the impact of market volatility. (Diversification does not protect against losses or assure a profit.)
- Know your risk tolerance and invest accordingly.
- Utilize dollar cost averaging.
If you continue making regular, ongoing contributions to your retirement account, when the market falls you will be able to purchase more shares of a mutual fund for the same dollar contribution. It’s like buying when the market is on sale. The last thing you should do is stop contributing—it’s like skipping the sale on school supplies and waiting for them to go back to full price before buying. (Dollar cost averaging does not assure a profit and does not protect against loss in a declining market.)
- Save early and save more.
Contribute as much as you can to your savings plans as early as possible to get the full benefit of compound interest. Compounding happens when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings, and then those earnings are reinvested and so on.
- Rebalance your portfolio as needed.
- Investigate investment options.
We have a variety of investment options available to suit your needs. Take our investor suitability questionnaire to find out what investment style may be best for you. Then review our investment strategy options.
- Take advantage of Member Benefits’ expertise.
Investing involves market risk, including the loss of principal.